Business, Professional and Occupational License Taxes
Due date: March 1st of each year (full payment). March 1st and June 15th(renewing businesses may be eligible to pay half of their tax liability on each of these dates).
Tax rate: Thirty dollars ($30) for any business or person with gross receipts (or purchases in the case of wholesale merchants) of five thousand dollars ($5000) or more but less than one hundred thousand dollars ($100,000) in a given license year. For a business or person with gross receipts of greater than one hundred thousand dollars ($100,000) the applicable rate for the business license tax is set forth in § 98-635 of the City Code.
Different tax rates apply to different types of businesses: for retailers, twenty cents ($.20) per one hundred dollars ($100.00) of gross receipts; for financial, real estate and professional services, fifty-eight cents ($.58) per one hundred dollars ($100.00) of gross receipts; and for wholesalers, twenty-two cents ($.22) per one hundred dollars ($100.00) of purchases.
Description: Localities are authorized by law, the Code of Virginia, to impose a local license tax on businesses, professions and occupations operating within their jurisdictions.
How does it work: A license tax is levied and collected for each license tax year or for such other period of time as may be specifically provided on every person engaged in a business, profession or occupation in the city of Richmond, unless otherwise exempted by law. The City Code sets the definitions for the types of businesses and the Director of Finance determines the correct category of the business and assesses a business license tax at the rate established by Richmond City Council for that category of business. Every person engaged in more than one business, occupation or profession in the city for which license taxes are prescribed, will be assessed with and will pay the license tax prescribed for each respective business in which they are engaged.
A business engaged in more than one category (classification) of business may elect to report all of their receipts and remit all of their business license taxes in the higher rate category if they choose. Otherwise, the receipts will need to be allocated among the categories of business and the taxes computed based on the rates applicable to each respective category. For additional information please review Section 98-633 of the Richmond City Code.
Penalties and Interest: A penalty may be imposed upon the failure to file an application or the failure to pay the tax by the appropriate due date. The prescribed penalty is: 1) ten (10) percent of the tax, or 2) ten dollars ($10), whichever is greater; 3) in no case shall the penalty exceed the amount of the tax.
Appeals: Richmond City Code Section 98-668 provides the details regarding appealing business license tax assessments. Generally, assessments may be appealed administratively to the Director of Finance. The director’s final determination may be appealed to the Virginia Department of Taxation. The taxpayer always has the option of filing their appeal directly with the Circuit Court.
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